For each of the following pairs of products state which are complements, which are
substitutes, and which are unrelated.
a. House plants and potato chips
b. Eyeglasses and contact lenses
c. Motorcycles and gasoline
d. Smartphone and smartphone apps
e. Red wine and white wine
In 2011, a number of Canadians purchased homes in Arizona. Which of the following
would not be a logical explanation for this?
A) The value of the Canadian dollar relative to the U.S. dollar increased during this
time.
B) The U.S. dollar depreciated during this time.
C) The Canadian dollar appreciated during this time.
D) The U.S. dollar appreciated relative to the Canadian dollar during this time.
The industrialized group of countries has growth rates that are consistent with the
findings of the economic growth model. That is, Taiwan, Korea, and Singapore had
________ incomes in 1960 than the United States and Switzerland, and Taiwan, Korea,
and Singapore grew ________ than the United States and Switzerland between 1960
and 2010.
A) lower; more rapidly
B) greater; less rapidly
C) lower; less rapidly
D) greater; more rapidly
If Congress wanted to counteract the effects of a recession it could
A) increase tax rates.
B) increase taxes by a fixed amount.
C) increase government purchases.
D) decrease defense spending.
Figure 4-5
Figure 4-5 shows the market for apartments in Bay City. Recently, the government
imposed a rent ceiling at R0.
Refer to Figure 4-5. With rent control, the quantity supplied is Q1. Suppose apartment
owners ignore the law and rent this quantity for the highest rent they can get. What is
the highest rent they can get?
A) R*
B) R1
C) R0
D) more than R1
Presently, GDP is ________ to compensate for the costs of environmental damage.
A) fully adjusted
B) partially adjusted
C) adjusted on a chain-weight basis
D) not adjusted
Between 1950 and 2009, the average length of recessions in the United States was
A) 11 months.
B) two years.
C) three months.
D) eighteen months.
Assume you set up a sole proprietorship and your lawyer tells you that as the owner,
you could stand to lose your personal wealth if the business goes bankrupt. This means
a sole proprietorship
A) faces limited liability.
B) faces unlimited liability.
C) has little chance of succeeding.
D) is not a good type of business to set up.
Countries with high rates of economic growth tend to have
A) a labor force that is more productive.
B) a lower life expectancy at birth.
C) low rates of technological advancement.
D) a declining incidence of business cycle fluctuations.
If the balance on the current account is $346 billion and the balance on the financial
account is -$204 billion, what is the balance on the capital account, assuming no
statistical discrepancy?
A) $550 billion
B) $142 billion
C) $0
D) -$142 billion
Cyclical unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the
requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.
In the United States from 1981 to 2011, deaths from which of the following increased?
A) cancer
B) kidney disease
C) heart attacks
D) strokes
Article Summary
In an attempt to discourage smoking, New York City Mayor Michael Bloomberg
proposed a bill which would set a $10.50 minimum price for a pack of cigarettes. The
bill would also prohibit retailers from offering any discounts such as 2-for-1 offers or
accepting discount coupons. New York City already has the highest cigarette tax in the
country, at $5.85 per pack, and the state of New York is one of many which already
require cigarettes be marked up by a specified percentage. This bill is a companion to
one which would require stores to keep tobacco products hidden from sight. Although
the bills are expected to be challenged in court, a precedent has been set in Rhode
Island, where a court upheld a ruling allowing the city of Providence to forbid retailers
from accepting coupons and offering discounts on cigarettes.
Source: Vivian Yee, “Bloomberg Seeks End to Cheap Cigarettes,” New York Times,
March 26, 2013.
Refer to the Article Summary. The minimum price of $10.50 per pack of cigarettes
being proposed by mayor Bloomberg would have which of the following effects on the
market for cigarettes?
A) Consumer surplus will decrease.
B) Some producer surplus will be transferred to consumers.
C) Deadweight loss will decrease.
D) Marginal benefit will be less than marginal cost.
Figure 3-1
Refer to Figure 3-1. A decrease in the expected future price of the product would be
represented by a movement from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.